Economics Dictionary of Arguments

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Mause I 272
Optimal Taxation/RamseyVsEdgeworth/Ramsey: how should the use ((s) instead of the amount) of income be taxed?
Problem: taxation, which causes welfare losses for individuals only in the form of negative income effects, would have to take the form of flat-rate tax amounts that are levied independently of income. (1)
Solution: tax household consumption, i.e. set a separate tax rate for each consumer good.
Problem:
as long as not all goods are taxed identically, this leads to efficiency losses resulting from substitution effects. Citizens change their plans when prices change. ((s) Substitution problem: shift in demand to less taxed goods).
Solution: the task of the state is then to reduce efficiency losses. This changes the focus of the theory: it is no longer first and foremost about the distribution of burdens to individual households, but about the question of which goods should be taxed and how high in order to keep the overall welfare losses as low as possible.


1. Frank P. Ramsey, A contribution to the theory of taxation. Economic Journal 37, 1927, S. 47– 61.


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Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution.
The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.

Ramsey I
F. P. Ramsey
The Foundations of Mathematics and Other Logical Essays 2013

Ramsey II
Frank P. Ramsey
A contribution to the theory of taxation 1927

Ramsey III
Frank P. Ramsey
"The Nature of Truth", Episteme 16 (1991) pp. 6-16
In
Theories of Truth, Paul Horwich, Aldershot 1994

Mause I
Karsten Mause
Christian Müller
Klaus Schubert,
Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018


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